Question

What is the purpose of calculating the solvency ratio in insurance?

a.

To determine the profitability of the insurer

b.

To assess the insurer's market share

c.

To indicate the insurer's level of financial stability

d.

To estimate the insurer's operational efficiency

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).To indicate the insurer's level of financial stability Explanation:The solvency ratio in insurance is calculated to indicate the insurer's level of financial stability. It is a measure of the insurer's ability to meet its obligations and maintain solvency.

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Q. What is the purpose of calculating the solvency ratio in insurance?
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